Private imports of used cars took a tiny uptick in January so far, compared to the same period in 2014, thanks to a faint improvement in the exchange rate between the euro and sterling. At the time of writing, €1 buys you just over 78p (not including commission rates from banks etc) and, as a rule of thumb, it’s usually thought that a rate of €1 to 80p is the crossover point where shopping overseas makes sense.
The increase in sales was tiny, just 3.88 per cent, according to figures from the car history and data experts Motorcheck, but it does at least open up the age-old question of whether or not buyers – and the trade itself – should be looking across the Irish Sea for superior cars or bargains.
The answer seems to be a qualified “yes”: buyers should be looking, but only realistically if they’re shopping in the premium-brand price brackets. And that’s assuming that they haven’t already been tempted away from the used market by new car offers here.
"Imports are definitely not keeping pace with the new car market, as you can see from the stats," Michael Rochford, managing director of Motorcheck, told The Irish Times. "One factor is obviously the exchange rate, but another factor is the value being offered in the new car market combined with the economic recovery has meant a lot of buyers who might look at a one- and two-year-old vehicle are actually buying new and using offers such as PCP to avail of low monthly payments.
“There is still a shortage of good-quality indigenous used stock in the Irish market, however; as pointed out, a large proportion of these buyers are opting for new rather than used in both the ‘used imports’ and ‘used indigenous’ markets. The volume of reductions in the used sector has been outweighed by the increase in the new sector; there have been small volume reductions in both used and used imports but two successive years of 30 per cent increases in the new market.”
Directly correlated
Rochford made the point that used car imports here are directly correlated to the relative values of the euro and sterling, but “I would suggest that exchange rates are moving closer to 2014 levels, so if the trend continues in this direction it should follow that used cars imported in 2016 will increase accordingly.”
However, it could still be the case that buyers will only truly find value in the UK if they're buying in a higher price bracket. Ashley Winston runs the Palmdale car-finding service in Britain. Simply give the company the details of a make and model that you'd like to buy, and they'll track it down for you. The company has helped many Irish buyers in recent years, but that number tailed off significantly in the past 24 months of poor exchange rates. "Yes, Irish buyers sort of disappeared off our books for a while," said Winston. "That has turned around in the last little while, though, and I'd say we're looking at a four- to five-fold increase in people from the Republic using our service, although I should say that it's still a very small number of clients for us overall."
But why are these buyers coming to Winston, who charges up to £995 (plus expenses) depending on the price of the purchased car? “Simple: they’re saving money. There is some aspect of ‘I can’t find what I want here’, but the basis of it is saving money. Mind you, it’s really only feasible for those shopping in the £20,000 to £40,000 bracket. The exchange rate issue is smaller when you’re shopping at those price levels because you really can save a lot of money on the purchase price. Below £10,000 it doesn’t really work out so well. We do still get plenty of Irish buyers inquiring about cars at that level, but the process rarely moves forward. I think if the rates stay stable then we’d expect to see Irish buyers coming back to us. If rates improve, from an Irish perspective, then I’d expect to see a lot more.”
It is an indicator of the state of play of the Irish used car market that buyers can still make a significant enough saving in the UK used market to outweigh the costs of vehicle registration tax (VRT), the exchange rate, air fares, ferry tickets and more.
With the market for new cars having been in the doldrums from 2009 to 2013, there are limited options for buyers looking for good second-hand cars, especially if they want something more interesting than that regulation silver hatchback norm.
Eithne Sweeney is a pharmaceutical executive from Cork who is shopping for a second-hand Mini Clubman, and she sees no option but to look to the UK.
"Primarily, I'm looking in the UK for more choice," she told The Irish Times. "I think the Mini is very much about looks and I want to be excited about it, whether it be a colour that I love or a really nice interior. There isn't a huge amount of second-hand Clubmans for sale in Ireland – I wasn't able to find anything I liked enough, not within my budget anyway. There just isn't enough choice for the particular car I'm looking for, and what's available is fairly bog-standard.
Stung by VRT
Sweeney has also been stung in the past by the dreaded VRT.
“We brought our current car, an Insignia estate, in from the UK and even though we thought we had entered all the details right on the website, it turns out they didn’t have our exact version on the website and it cost us a significant amount extra.”
There are pitfalls, though, not least of which is the issue of vehicle history and outstanding finance. With the UK market so much larger in volume than the Irish one (more than two million new cars were sold in the UK in 2015), greater too is the chance of coming across a car with a less than squeaky clean background. UK vehicle check site HPI recently highlighted the issue, pointing out that certain areas of the country are worse than others for vehicles sold with outstanding finance owing.
Neil Hodson, deputy managing director for automotive experts CAP and HPI, explained: "It's very clear from our data that the chances of buying a car that still has finance owing against it is much more likely in some regions across the UK than others. Dealers in the regions London, East Anglia and the southwest are the least likely to find themselves with a car that is legally owned by someone else.
"However, if we drill down to sub-regions, high volumes of HPI checks conducted by buyers in the City of London, Isle of Lewis, Isle of Man, South Glamorgan and Ayrshire are hitting the HPI finance register the most, meaning these cars are likely to be owned by the finance house. The risk of buying one of these cars is that it could very well be reclaimed by the finance company who holds legal title. Dealers have the additional worry of selling one of these vehicles on to a customer, putting their business and reputation in jeopardy."
VRT. Air fares. Ferry travel. Hotels. Food on the road. History and background checks. All of these obstacles are placed in the way of the Irish car buyer looking for a bargain with yellow rear number plates. And yet, all it took was a marginal change in the rate of currency exchange to have more people looking to the UK for cars. If that isn’t a wake-up call for the Irish car trade, I’m not sure what is.